Coforge Q3 Results Review: Dolat Capital Maintains 'Sell' On The Stock — Here's Why

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Dolat Capital Report

Coforge Ltd. reported revenue growth of 8.4% constant currency QoQ (our estimate: 3.8%), led by a broad-based vertical outperformance, despite a seasonally weak quarter. The Cigniti business grew 3.5% QoQ in CC terms, while the Core business grew 9.4% QoQ.

Additionally, the adjusted Ebitda was up 122 bps at 17.8% QoQ (our estimate:12.4%) led by operating leverage. Cigniti Biz, adjusted Ebitda too, expanded by 103 bps to 17.3%.

Management expects robust growth to continue, supported by healthy intake ($1.4 billion executive order book up 40% YoY and fresh order intake of $501 million), improved pipeline and benign commentary across verticals.

We tweak our adjusted FY25/FY26E/FY27E PAT est. by -12.7%/+7.1/+7.2%, factoring Q3 financial performance. While we see potential synergy benefits contributing to growth, margins continue to face pressure. Thus, we maintain ‘Sell’ rating with target price of Rs 8,320 at 35 times FY27E.

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